Monday, October 24, 2005

I reckon a battle is brewing for control – or lack of it – in the home WLAN space.

About 30-40m homes around the world are thought to have WiFi networks already, although that number is skewed quite heavily towards the US market. Most of these are bought retail at ever-lower prices. An increasing number of broadband service providers are sneaking in WLAN to new subscribers' homes (whether they need it or not) in integrated home gateways. Although some providers are tempting users to trade-in their old equipment, I bet many users still run two APs or routers in parallel (or at least keep one in the cupboard).

What this means is that any WiFi device will need to have some damn good connection-management software and an easy and flexible user interface. Services providers and equipment suppliers have to assume that homes will have multiple APs/routers. And customer service departments dealing with wireless-related inquiries will need some pretty impressive skills to navigate users through this minefield.

It also strikes me that there's a whole bunch of product opportunities out there waiting for enterprising vendors. Just don't give me the "you only need our box" pitch, because it's plain that the average broadband household in 2009 will have 2+ separate wireless networks. Oh, and add in WiMAX/TDD/Flash-OFDM/HSDPA/EV-DO/etc while you're at it.....

Friday, October 21, 2005

I had an interesting thought during an IMS (IP Multimedia Subsystem) presentation at an industry event today... if operators (fixed or mobile) start to act as aggregation points for "user identity" (ie linking together your service subscriptions, phone #s, IM accounts and so on), will users face absolute lock-in with their contact lists / buddy lists etc? This certainly seems to be one of the possibilities / threats being posited about IMS-based networks & applications.

Does this mean that you will have to accept you have an "operator for life"?

Or will there have to be cooperation (or laws) about "personalisation portability"? (in the same way I discussed the lack of email portability recently). How would this work?

Or will users be better off with (free) "operator independent" Internet-based identity hubs like MSN, Google or Yahoo!

I'm listening to a presentation by a major mobile network infrastructure vendor. It's about the opportunity for mobile content distribution - over-the-air downloads of music, streaming video, and various new and innovative ways of delivering "traditional" content like ringtones.

Much of the pitch seems to be trying to convince a roomful of analysts that various historical oddities and asymmetries of the mobile business (like $4 for a ringtone, vs $1 for an Internet music download) are not only sustainable, but justifiable and extensible. Phrases like "creating a conversation around the content" and (& no I'm not joking here) “surfing your own taste curve” are being used to explain why things like ringback tones and paid video clips will continue to generate substantial revenues for mobile carriers.

I'm unconvinced this logic (or marketingspeak) applies universally, if at all. It strikes me as another attempt by the increasingly-cloistered "Old Mobile" industry to pretend that it can defend its worldview against growth of the Internet, home broadband, IP, iTunes, Bittorrent and various other emerging multimedia technologies.

Two factors lead me to think that this model is over-optimistic:

- firstly, mobile devices have multiple ways of getting content on and off the device - cellular, WLAN, memory cards, Bluetooth, USB etc. They're also getting smarter - full operating systems like Symbian and Windows Mobile, better Java and so on. Basically, the user will find it easier to play arbitrage games, getting cheaper/better/more convenient content via the PC or other sources, without DRM limiting their content portfolio to a single device or mobile carrier (fancy losing your music or video library when you switch operators?)

- secondly, an ever-increasing population is getting used to broadband home Internet access. This is rapidly setting an expectation that there's a lot of "good free stuff" available, with even more "premium but not that expensive stuff". That expectation didn't really exist in massmarket perception 2 years ago, and is now growing incredibly rapidly - more rapidly than the use of mobile content on phones. I believe that these attitudes will rapidly extend to the mobile world, and will undermine the supposed value of the "conversation" around mobile content.

Thursday, October 20, 2005

Recently, there has been a huge surge of interest in bits of equipment that fit within mobile networks, and treat different types of traffic in different ways. "Block Skype", "Prioritise XYZ application", "Filter dodgy content", "Offload ABC application to a separate network" and so forth.

While some of this falls into the "fair enough" category, for example stopping children accessing dodgy websites on their phones, or stopping peer-to-peer traffic from bringing down a network, the more heavy-handed tactics smack somewhat of bad grace and censorship.

Quite a lot of this discussion has been based around the concept of stopping users from accessing apps or data hostile to the operator's business model (Skype or other 3rd-party VoIP, off-portal content etc) - or at least charging them more.

“We know that you, our customers, want to use that nice free stuff on the real Internet via your mobiles. We know you’re already used to using it over broadband at home and at work. And we know we could just give you a mobile “pipe”. But we’ve spent lots of money on our brand and beautiful walled garden, so we’ll throw our toys out the pram if you dare go to MSN, Google, eBay or content owners direct, rather than use our restricted and overpriced range of stuff. And don’t even think about comparing VoIP or IM with our oh-such-good-value voice and SMS tariffs. So we’re blocking it or degrading it out of spite, because we can't compete head to head & we're scared of the big bad IP world coming round the corner”.

I reckon that we’ll see two levels of this type of filtering / routing:

- "Service aware" networks are very believable and arguably essential. Services like video streams, mobile synchronisation signals and (maybe) voice require specific transport-related QoS criteria to be fulfilled in order for them to work. They are latency sensitive, need guaranteed bandwidth and so on. Having routers or “packet inspection” gear in the network to spot, optimise and variably route these traffic streams will happen. It will drive cheaper aggregated backbones, and enable triple-play type services. But there are only a certain number of these types of “service profile”, they don’t evolve that quickly, and they are likely to relate to in-house or partners’ services, which will be developed by cooperative individuals or companies.

- “Application aware” mobile networks, however, will probably fail. Applications (and programming techniques) evolve much faster than the policies can be developed to manage them. They are often developed by people who are uncooperative, and who will look for arbitrage opportunities. They are being aided and abetted by ever-smarter devices. And trying to separate a "friendly" app from an unfriendly one isn't as easy as it seems... and it will get even harder with wider use of applications made up of multiple components. Oh, and it's also worth noting that in some cases this is likely to be illegal anyway, even if it's technically feasible.

Who is to know if a Bittorrent transmission is an illegal video, or an investment bank's clever new way of distributing realtime prices to its dealers? Is that video stream Tom & Jerry, or a doctor's new telepresence app, or a video add-in to an enterprise application? Who knows what's inside that IP-VPN tunnel, especially if it's encrypted?

And even if some operator tries to block certain apps and prioritise others, surely some innovative software developer will tweak the "profile" of the application. Maybe an enterprising open-source coder will work out a way to make VoIP look and behave like SAP? And what happens when applications are written in component form? Trying to work out what application(s) a chunk of XML or .NET code ultimately fits into will be nigh-on impossible. And what happens where you have "layered" applications, like an email form, within a web page, accessing a portal, which feeds into a back-end e-commerce application?

This all reminds me of the late-1990s marketing hype for enterprise network policy management... "restrict the marketing department to 10% of Internet bandwidth except after 6pm", "de-prioritise email in favour of voice". That mostly failed, as companies realised they'd have to employ people called "policy managers", with a combination of IT, HR and business skills, in order to actually work out the policies effectively. In the end, everyone more-or-less gave up, threw more bandwidth at the problem, and just separated out a couple of the most sensitive data streams like voice.

To borrow from and extend a famous comment about the Internet by the EFF's John Gilmore....

"Smart applications will treat packet inspection as damage and route around it"

Monday, October 17, 2005

Why is it that the mobile phone industry (and its financial watchers) still clings to "volume market share" as such an important indicator? Given that phone prices span the range from $30 to $1000, surely it's an increasingly irrelevant statistic.

It's notable that watch manufacturers tend to quote revenue numbers rather than units. And if people do comment on volumes, they focus on a specific segment like "fashion watches" - they don't lump Fossil, Swatch and Seiko shipments in with cheap $5 watches from China or $20k Rolexes.

Personally, I expect cellphone market volumes to continue to rise, but predominantly at the low end. I'll make a bet that exhibitors at trade shows in 2009 will be giving away cute freebie branded phones with $2 prepaid credits, instead of mouse mats, coffee mugs or USB memory sticks. They'll start coming free in packets of cereal by 2015.

So forget volume, unless it's in a particular market segment like "featurephones". Tell us about the aggregate value or the profit margin instead.

And don't get me started on the mystical status of mobile operator ARPU as a useful number either.

I've spent some time recently thinking about the various flavours of wireless/mobile broadband and talking to assorted hopeful vendors.... Qualcomm/Flarion's Flash-OFDM, IPWireless' UMTS-TDD , Intel's favoured WiMAX , and assorted others, as well as various companies attempting to suggest that evolved "normal" cellular technologies like HSDPA could become viable ADSL/cable-rivalling broadband replacement technologies. The proponents of these technologies are already busy fighting among themselves . I'm wondering where the overall sector is going, and how long it'll take to get there.

There seem to be 3 main target markets

- laptops (data cards or embedded)- fixed-wireless as an alternative to ADSL or cable broadband- PDAs and phones

Laptops

The clearest demand (and perhaps the smallest ultimate addressable market) is in laptops. Following on from WiFi's success (especially post-Centrino), and reasonable uptake for WCDMA and EV-DO data cards, it is something of a no-brainer to suggest customers want faster, cheaper, more reliable and ubiquitous connections for their notebooks. There also isn't that much of a large market for people wanting to run VoIP from laptops, so the thorny issue of cannibalisation of voice revenues doesn't really matter here.

However, there are still plenty of problems around indoor coverage, which is generally lousy for all these technologies. I'm also very skeptical of the idea of embedded EV-DO / HSDPA capability being shipped by the manufacturer - who wants to tie themselves to a specific service provider for the 3-year life of a laptop? I shudder to think of the software hassles if you want to change to another network....

Broadband replacement

Is broadband wireless a DSL replacement? Hmmm. We've been here before . A million-odd customers in the US and 5m worldwide since about 1997. Big deal. Sure, there are a couple of early deployments of wireless broadband that are great for sparsely-populated, low-competition areas in wealthy countries like Finland and New Zealand, where the local fixed/cable operators haven't been forced to roll out networks. And TDD and WiMAX seems to have found a promising niche as backhaul for on-train WiFi, while a few brave operators are using fixed WCDMA for home data users.

I'm entirely unconvinced this is a mass-market option, however.

The main problem? Copper (or fibre) is cheaper than spectrum. The other problem? It's usually easier to get planning permission to dig up a street, than to put a new base station on a roof. And most existing cell sites don't have enough backhaul capacity (or power) to turn them into the equivalent of a DSLAM or cable head-end. Most European 3G base stations have an E1 (2Mb/s) backhaul pipe. Adding capacity is complex, expensive and time-consuming. So while fixed broadband is already driving down the bandwidth curve... 512k, 1M, 2M, 8M, 24M, 45M, 100M, I've even heard plans for residential Gigabit Ethernet... the wireless options are still mostly at the stage of shared 2M capacity amongst an entire cell's user base.

Overall - it's another niche. At some places and some points in time, wireless (of any flavour) might temporarily compete with fixed pipes, but it's not a massmarket urban-area solution. "Everything" certainly won't be wireless, despite the hype. Ever.

Handsets

Lastly, phones. Here, the argument is more WiMAX/TDD/F-OFDM vs. 3.5G (EV-DO, HSDPA). Will "3rd-party wireless IP" free our phones from the tyranny of cellular operators' data services? Clearly, there are already phones on sale which include EV-DO and WCDMA, with HSDPA in the pipeline. There's WiFi in some phones already .

Will we all be using TDD- or WiMAX-phones in urban areas instead? Not this decade, no.

Apart from all the previous arguments about indoor performance, base stations and backhaul, there are a whole range of issues in actually creating phones with these technologies in. First off is the problem of convincing the major chipset suppliers (especially TI) to support them. Then there's a whole spectrum (pun intended) of RF problems in designing-in and testing new technologies that work at a wide range of frequencies. Then there's battery life - and even heat dissipation (remember how warm your modem gets? fancy a phone with fan?).

And the software layer - an IP-only phone will need a firewall and maybe anti-virus, which means an expensive "open" OS. And a whole bunch of complexity around the user interface and how it behaves. In general, adding ANY new software to a phone is much more involved (and time-consuming / costly) than the majority of observers expect. It's not just a case of saying "it only needs an extra $10 chip - what's the problem?"

Conclusion

This post isn't intended as an exhaustive round-up of wireless broadband technologies. But it highlights some of the practical problems, and is intended to deflate some of the hype. As usual, there's a couple of good stories (eg rural broadband, cellular network backhaul, road warriors' laptops) obscured by mountains of marketing guff and rampant over-optimistic speculation. I'm broadly optimistic on the laptop-broadband sector (I'd use it) but the "residential fixed broadband replacement" and "handset cellular replacement" sectors don't really fly in my view.

Wednesday, October 12, 2005

Nokia's new E-Series of enterprise devices looks very well-thought out, and answers the "yeah, but what are the devices?" questions arising from previous announcements with Cisco and Avaya about dual-mode WLAN/cellular phones.

Notable from the announcement and the press conference has been the near-omission of any mention of the cellular carriers. This is absolutely spot-on from my point of view - in the enterprise, the IP-PBX vendors (and their channel partners) will be the kingmakers, with cellular providers playing second fiddle.

The interesting question will be to see which of the hybrid fixed/mobile operators are first to leverage their historic enterprise PBX business divisions and deep reach of their corporate sales forces to push these devices. My bet is on these devices (and maybe some more from Motorola and HTC) being part of the BT Fusion Enterprise service which will probably emerge over the next 6 months, possibly with France Telecom and Telecom Italia following suit in rapid order. The US market, where mobile carriers have much greater control over device distribution (and much greater fear of VoIP), may well lag, despite BellSouth's well-publicised trial of the earlier Motorola/Avaya solution.

One last thought for now - Nokia's lack of emphasis on "seamless" handover of voice calls between cellular and WLAN is also spot-on. My view is that this is very much a "nice to have", and can wait until later. More important in enterprise is the ability to hand off well from one WLAN access point to the next.

UpdateHaving played around briefly with a prototype of the E70, I can say that it's the first ever Nokia device I'd consider buying myself. Great spec, reasonable form-factor given the keyboard, and no heinous omissions or errors (unlike the unfortunate Sony Memory Stick in the otherwise-cool Sony-Ericsson P990 I saw yesterday).

... Symbian really needs to persuade one or more licencees to produce a ruggedised smartphone for enterprises. Many companies will start deploying mobile applications on high-end handhelds from companies like Symbol, and then work "downwards" towards other mobile devices. If they deploy applications on Microsoft-powered ruggedised devices for field service employees, they are unlikely to port these to Symbian OS when they look at enabling phone-based users.

... an increasing number of Symbian (and Microsoft) phones are featuring WiFi. There seems to be disagreement as to whether applications and users need to be "bearer aware" - ie should they know if they are connected via cellular, WLAN, or both (and in future WiMAX and other broadband technologies). I think it's imperative - end users, be they consumer or business - already behave differently when they use WiFi. They don't think about data volumes (think about large attachments, or web radio streaming), they want access to local resources (PC, corporate servers, HiFi etc), and their dependencies on security, latency, QoS and price all differ. It isn't obvious at present whether Symbian (and by extension Series 60 and UIQ) have fully understood this yet.

Tuesday, October 11, 2005

Trekked out to the desolate wastelands of East London, to the barn-like Excel conference centre today. Been listening to new Symbian CEO Nigel Clifford wax lyrical about the potential for extending its existing addressable market. The mobile phone OS company is intending to push down into the next tiers of devices, usually referred to as featurephones.

It is also loudly pitching mobile operators on the benefits of consolidating their supported handset software platforms. At the moment, most operators implicitly endorse a dozen or more embedded and "open" OS's on the phones they sell, largely because they leave the decision up to their handset suppliers. This, Symbian claims reasonably, drives up the cost of selecting, customising and testing phones. So, "obviously", the ideal solution is to become a Symbian-only operator, benefiting from the wonders and efficiencies of open operating systems....

But it's not that simple.

I remain distinctly unconvinced about the chances of convincing operators to become much more proscriptive about which OS's they support, despite this logic. The only operator that has really done this successfully is NTT DoCoMo in Japan, which develops its own flavours of Linux and Symbian OS and UI, and licences these back to the manufacturers of its 3G FOMA phones.

Other operators have either specified certain bits of the "application layer", (eg telling suppliers to use certain types of Java or Qualcomm BREW on top of their base platform), or have just written lengthy specification documents about how phones should behave.... and left it up to the manufacturers to choose their own way of achieving these ends.

Yes, in theory it would be great for Vodafone or O2 to force Nokia, Motorola, LG et al to just use Symbian Series 60, or Windows Mobile 5.0, or some variety of Linux. But in my view this just won't work.

Firstly, there will be certain customer segments that make their own choice - especially enterprise customers. If the IT director wants Microsoft phones, they'll get Microsoft phones. If their sales force has car kits that only work with XYZco's handsets, they'll get XYZco phones, irrespective of whether the operator doesn't like the embedded OS.

Secondly, there's the RAZR factor. No operator is going to want to pre-judge 2007's coolest phone now. And when it arrives, and their customers are clamouring for it, they are not going to say "sorry, it's got the wrong OS, you'll have to churn to our rivals if you want one".

Thirdly, all the manufacturers have got huge resources, personnel, intellectual property, customer loyalty and product roadmaps tied up in their midrange proprietary platforms, and they won't be binning this any time soon. Symbian's biggest competitor isn't Microsoft, it's the Nokia Series 40 team. And the Motorola Java-Linux team, and Samsung's in-house OS people are also pretty much entrenched.

Lastly, the cheapest phones will always be non-smart, knocked out for $25-50 by an ODM in Taiwan or China. They may well be cool & funky, and they'll appeal to pre-pay customers or those that just want a voice device. Forcing an expensive phone on a $15 per month user is ridiculous.

Overall, I can see some operators logically wanting to reduce the number of (implicit) OS suppliers supported via their portfolio of phones. But I just can't see it making it past the drivers of customer demand (ie cool devices) and inertia from their suppliers. Add in the fact that most users neither know nor care about their phones' "smartness", and the idea of Symbian taking over the world looks as far-fetched as ever, although its sales volumes will certainly rise. Of course, all these arguments are also true for Microsoft and the increasingly-fragmented mobile Linux fraternity as well. Bottom line? Full-blown smartphone OS's will remain niche, especially outside Nokia and DoCoMo.

Monday, October 10, 2005

Well, despite my cynicism from last week, it looks like Fusion is indeed actually happening, albeit relatively slowly. According to comments I've got from BT, the company started processing orders on Sep 28th.... which sort-of gets them off the hook from their earlier claim for "the service being widely available for delivery in September."

"Processing orders" involves weeding out those from the extensive (20k+) list of those who've registered an interest. BT has to contact people, confirm that they're still interested, and that they are "eligible" for Fusion. Eligibility means being a BT Broadband customer, and not having a long-running mobile contract that can't be transferred.

Through the rest of Q4 BT is likely to be focusing on this backlog, marketing to other existing BT Broadband subscribers, and attracting new BT Broadband customers (presumably with some sort of bundle or introductory offer). It'll be interesting to see if BT can come up with a consumer broadband supplier-switching strategy that gets around the email portability issues I talked about last week.

If I had to take a guess, I'd say this means the company is probably looking at signing up perhaps 30-50,000 subscribers by the end of 2005, or maybe 50-100k if they've got a cunning Xmas marketing promotion up their sleeves.

If anyone's actually got a Fusion phone, I'd love to hear some feedback on how well it works (the phone, the Bluetooth AP, the handover, customer service, setting up the Home Hub with your PCs etc).

Friday, October 07, 2005

Just like its scientific namesake, BT's Fusion service seems to be taking longer than anticipated to reach reality.

Despite the promise of "the service being widely available for delivery in September" (and this confirmed by me in a call a month ago with BT FMC guru and FMCA supremo Ryan Jarvis), it still seems to be at the stage of soliciting customers to "register interest". There's certainly been no fanfare or even press release to note its passing into massmarket deployment.....

No particular clues on what's causing the delays, but I have a suspicion that the installation in customers' homes (especially if it means the user ditching an existing ADSL modem & WiFi AP, with all the PC and software reconfiguration that entails) may be a culprit.

It also wouldn't surprise me if BT's MVNO relationship with Vodafone has made it more tricky to do the network-side integration than might have been the case with an in-house cellular network. The MVNO deal with Voda is certainly "deeper" than the average "consumer brand capacity resale MVNO" affair, but the emerging dual-mode handset / "seamless roaming" architectures need some pretty tight coupling with various bits of cellular core network gubbins like MSCs and HLRs. And of course, nobody could possibly imagine Big Red only playing precisely by the T's and C's? Surely they'd willingly go that extra mile to help out a key partner launch a flagship service if necessary?

Thursday, October 06, 2005

Far be it from me to take pot-shots at my peers & competitors.... but another research firm seems to have been dazzled by the glare of UMA's (Unlicenced Mobile Access) publicity spotlight. It references an earlier study by Motorola that suggests that Europe's consumers are panting in anticipation.

That survey came to the not-so-surprising conclusion that people would be happy to have better wireless coverage at home, and pay less for it.

"50 per cent of respondents said they would be likely to sign up to a UMA service within 12 months"....

To their credit, Motorola even asked the survey's participants if they'd be prepared to change their broadband supplier - absolutely critical if a mobile operator or new entrant wants to offer an FMC (fixed-mobile convergence) service without partnering with the leading broadband service providers.

However, what they didn'task is whether people would change their broadband supplier, and their ISP email address. Unless you use Hotmail, Yahoo! Mail or similar, this is a dealbreaker.

Think about it.

How many people, websites, mailing lists and so on have your broadband ISP email address? How long would it take to change them? How many times have you entered your email address to recover a forgotten password? Do your partner & kids have ISP email addresses too?

Your email address is perhaps the stickiest, most anti-churn, personal service out there. Sure you can add more email addresses - Gmail, your own domain - but ISP email is the primary address for a hell of a lot of people. It's easier to change your mobile than your email, as at least you can run two in tandem during the switchover period. And there are no "email portability" laws.

I can't think of any successful broadband switching strategies among ordinary suppliers - let alone mobile operators new to the game.

Basically, this means that any FMC operator (UMA or SIP/IMS-based) is going to have to work around existing customers' existing broadband contracts and providers. And this is before we get to the thorny issues around who supplies and manages the broadband router & WiFi AP.....

Wednesday, October 05, 2005

Welcome to Dean Bubley's blog covering the mobile, wireless and fixed/mobile convergence industry. As founder of Disruptive Analysis, I research, analyse and advise upon a broad spectrum of topics in these areas.

This blog will be a source of short comment pieces on announcements and underlying market trends in the cellular, WLAN and IP sectors. As the company name suggests, I specialise in looking for "failures of consensus" - either positive or negative.

Too many technologies, services, applications and platforms in the wireless industry are over-hyped or under-estimated. Often, a deeper and broader look, coupled with a little skepticism and (occasionally) a dose of cynicism, would highlight missed opportunities - or technical or commercial problems that could derail an otherwise competent business plan or forecast.

Under-estimated- PBX/cellular integration- Poor indoor performance of 3G, WiMAX and other services- Novel in-building wireless coverage solutions- "Single-mode" (non-cellular) VoWLAN phones- Impact of VoIP on cellular pricing- Upgrading cellular network backhaul- Difficulty of integrating & testing new features on mobile handsets- The impact of a lack of "email portability" on FMC business models- The role of "service enabled" home gateways for FMC

I'll be fleshing these out over time - either on the back of announcements or events, or when I get a chance to air my general opinions & research findings.

Disruptive Analysis Workshops

- Mobile broadband traffic management strategies- Technology and market evolution- Business model development & unique propositions- Pre-launch feedback on new products and services- Business plan due diligence- Leadership team development